Markets do the tariff tango: Dow declines, the others advance, Gold flirts with $3,180

• Liberation day is here! Announcements at 4 pm in the Rose Garden.

• Global investors remain on the edge.

• Stocks remain anxious….

• Bonds rally, Gold rallies and Oil awaits…

• Try the Rigatoni.

The instability continues to hit US markets….the Dow trading in a 600 pt range before ending the day down 12 pts, the S&P a 100 pt range ended up 21 pts, the Nasdaq traded up and down in a 400 pt range adding 150 pts by 4 pm, while the Russell traded in a 40 pt range ending the day flat…..….The VIX traded up 6% before ending the day up on 0.5%, Bonds rallied – that makes sense – the TLT up 0.5% while the TLH added 0.3%, Gold kissed $3,177 (up $20) before ending the day unchanged, Oil retreated by 0.5% all while we and the world await today’s 4 pm tariff announcements.

Of the 11 S&P sectors only 2 ended the day lower…..Financials – 0.1% and Healthcare – 1.8% (this is a direct hit by tariff hysteria). The others ended higher….with Tech in the lead – up 0.8%. The rest of the market was mixed with no real disasters…..

On the eco front – we had Manufacturing PMI’s come in as expected – sitting right on or just a hair below the neutral line….the JOLTS report showed 100k less job openings (bearish) yet the Quit Rate rose slightly….which still suggests that workers are confident enough to ‘quit’ their job – and that suggests that they are finding better paying jobs somewhere else. (bullish). The Dallas FED reported that services activity in their region plummeted – down 11.3 vs. last months +4.6 and cars? Yes sir, Wards Total Vehicle sales were UP by 1.5 million vehicles…. Now, you could say that consumers ran out to buy cars before they got hit with higher prices or you could just say that consumers bought more cars in March.

OK – the tariff rollout is here…. It’s Liberation Day……the newest holiday being rolled out across this country…..Reciprocal tariffs are now only hours away from being announced…but let’s be clear – reciprocal tariffs are just ‘reciprocal’. These are trade duties or taxes (you choose your definition) imposed by a country on imported goods in response to similar tariffs placed by another country on its exports. The goal is to mirror or match the trade barriers set by the other nation, creating a tit-for-tat approach to trade policy. These tariffs are often used as a negotiating tool or retaliatory measure to encourage fairer trade practices, protect domestic industries, or address perceived imbalances in international commerce.

Now whether reciprocal tariffs are a "negative" depends on the perspective and context—economically, politically, or socially. They can have both advantages and drawbacks, and their impact varies based on who’s affected and the goals behind them. By now you know the positives and the negatives….The positives include: protecting domestic industries from unfair trade policy, they can give you ‘bargaining power’ – pressuring other nations to lower their own barriers ultimately correcting those trade imbalances, and it could be seen as a political ‘win’ – signaling strength to domestic voters…

On the other hand – they can cause higher prices for consumers – especially if it turns into a ‘trade war’. It can cause a disruption in the supply chain – which would slow economic growth – the most famous example is the 1930 Smoot-Hawley Tariff Act, which only deepened the 1929-1939 Great Depression. (But let’s be clear – we are NOT in a depression). Tariffs could risk driving up import prices raising the specter of inflation and it could cause global trade tensions – straining international relationships, potentially destabilizing long-term alliances.

In the end – it creates uncertainty, and we all know that the market and investors do not like uncertainty and so we get volatility….and lower prices….

In today’s context, some street analysts are warning of prolonged uncertainty and potential recession risks, suggesting a net negative for the broader economy if they spiral. While others are accentuating the positives What’s interesting – is the divide between so many ‘Ivy League’ educated economists/analysts – Is Econ 101 & 201 different depending on which school you attend? Apparently so…..

In the end – it is not Black and White at all. A small, strategic reciprocal tariff might achieve a policy win without much damage, while a sweeping one could backfire. The “negative” label hinges on execution and scale—limited use might be a net neutral or positive for the imposing country, but unchecked escalation often drags everyone down. So, I guess – the question is – will these tariffs be ‘unchecked’?

This morning US futures are LOWER! Dow futures down 180, S&P’s down 30, Nasdaq down 125 pts and the Russell is losing ground – down 10 pts. Again – you can’t be surprised…. uncertainty creates volatility and usually lower prices….in that ‘shoot first, ask questions later mentality.

Remember – the market can function whether the news is good or bad – it just doesn’t like all the uncertainty…. which by the way is exacerbated by all of the differing opinions offered…..

Now in the end – 1 or 2 things are going to happen. Mohamed El-Erian (one of those famous voices) tells us that ‘either this is going to work and we will get fairer trade practices, streamlined gov’t and an enabled private sector around the world or it won’t and this will turn into a global trade war defined by stagflation that becomes ‘well anchored’.

So boyz – start your engines……and remember – that while politics creates a lot of uncertainty – it does not price stocks in the long term – so price dislocations created by this uncertainty for large cap/mega cap names across the different industries should be viewed as a long term opportunity……but you need a strong stomach – Capisce?

Eco data today is all about the ADP employment report due out at 8:30…. we are expecting 120k new jobs, so let’s see what that is and then expect all kinds of analysis, in addition – look for Factory Orders +0.5%, Durable Goods of +0.7%.

Gold is up $7 at $3,155; Oil is trading at $70.40 – sitting right atop of trendline support while bonds are a bit higher…. pushing 2 & 10 yr yields lower…. The 2 yr is now yielding 3.85% while the 10’s are at 4.14%.

European markets are under a bit of pressure – nothing dramatic at all – as they brace for the tariff announcement. Big Pharma getting hit after any hopes of an exemption fade into the sunset….…. Germany getting hit the hardest – down 1.4%... Italy down 0.9%, Euro Stoxx and the UK – 0.8%, France down 0.7% and Spain is unchanged.

Yesterday we heard from Richmond FED’s Tommy Barkin, and he said nothing new…..he wants to see inflation move lower before he is voting to change policy… Today brings us Governor Adriana Kugler, tomorrow is Vice Chair Philly Jefferson and Governor Lisa Cook and Friday – it’s all about JJ Powell.

Remember - there is no reason to ‘rush out’ and be an aggressive buyer…. Patience is a virtue, and the recent action has only confirmed that narrative. April tends to be weaker in the first half of the month – and I don’t think that this trend changes this year.

The S&P closed at 5633 up 21 pts. The Washington Post reported that the WH’s proposal calls for a 20% tariff across the board on most imports – this in addition to the 25% on autos – but they qualified that by saying that ‘several other options are still on the table’ suggesting that nothing is cast in stone.

It’s a new month and a new quarter…while the story remains nervous – my sense is that it is calming down….but that does not mean we won’t test 5500 one more time at some point to see if it holds….and that could happen at any point in the next two weeks…. and remember – markets tend to ‘shoot first and ask questions later’, so make sure you are ready…..

Pasta with fava beans and guanciale

Make sure you have lots of fresh grated parmegiana for this simple dish.

You need – fresh fava beans, Rigatoni pasta, guanciale, and cheese.

Begin by blanching the fresh fava beans in boiling water…. Blanching – put them in cold water – then bring up to a boil and remove after 5 mins.

Put the beans in the blender – add some of the water and season with s&p. Make a fava bean type pesto – but you are only using the beans and water. Don’t make it soupy!

Boil the pasta – use rigatoni.

While this is happening – slice the guanciale and sauté it up in a pan – once crispy – remove the guanciale – but keep the fat in the pan.

Add the pasta to the sauté pan with the fat – drop in a ladle of the pasta water (tears of the Gods) and mix. Add in plenty of cheese and when you serve it – adorn with the guanciale that you sauteed up. Yum!